Bringing formerly outsourced jobs, especially manufacturing ones, back to the United States continued to be a hot topic this week at FCIB’s 25th Annual Global Credit Conference. While it is clear that outsourcing of jobs is no longer considered as much of a cost no-brainer as several years ago, nothing resembling a consensus on the matter has been established.
Some, like Euler Hermes Economist Dan North, proclaimed during his Global keynote speech that manufacturing reshoring is a real trend. Reasons for this include the US’s emergence as more of an energy power from its natural case holdings (Re: the cost of energy in and near America continues to decline), closer proximity to its destination markets of choice, easier quality control measures and some erosion of massive labor cost advantages formerly flouted by China and India, among others.
However, there are many success stories of outsourcing or, similarly, use of shared service centers for some credit functions. Hitachi Data Systems Corp. is an example of shared services working brilliantly, with demonstrated strong performance coming out of places like Poland. In addition, some believe mass reshoring still is more theoretical than the industry standard. “I’ve heard a lot about reshoring, but I haven’t met anyone who has actually done it,” said Cynthia Wieme, CCE, ICCE, MICM, of Norgren Inc. Also, with the recent Obama Administration pushback against tax inversion strategies, it stands to reason that the taxation status related to some offshoring operations could also be further considered by the federal government.
Even North, who views the re-shoring trend as one that is gaining, said there will be challenges for US producers, even if energy costs remain highly favorable. One blinding reason is, like Japan, a majority of the working population fits into an older demographic that is much closer to retirement than their prime productivity years.
“We’ve got an age problem in the United States,” North said. “We don’t have enough skilled employment to fill the labor market participation gaps.” He added that the US likely will need an improved program to encourage legal immigration of skilled workers from around the world.
- Brian Shappell, CBA, CICP, NACM staff writer